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Financial Services Tribunal hold FSCA has no penalty jurisdiction over foreign persons


In Viceroy Research Partnership LLC and others against the Financial Sector Conduct Authority, the Financial Services Tribunal was faced with the question whether the FSCA had the authority to impose administrative penalties jointly and severally on three partners in a foreign partnership who were not South African citizens nor residents, and the acts allegedly committed by them were not committed in South Africa.  The majority of the Tribunal correctly held that the FSCA has no jurisdiction to impose an administrative penalty on a foreign person (known as a peregrinus).

The three partners were responsible for producing a report on a South African bank which was bearish in nature and led to panic sales. As a result, a hedge fund made an estimated profit of R82 million and the profits were shared by the partnership. The FSCA imposed an administrative penalty of R50 million on the three partners jointly and severally.

The Financial Sector Regulation Act of 2017 does not deal with jurisdiction and whether the authorities have jurisdiction to impose an administrative penalty on a foreign peregrinus. The question depends on whether a superior court would, under common law, have such jurisdiction. The Supreme Court of Appeal has stated the common law in judgments binding on the Tribunal. A superior court would not have had jurisdiction in a civil case against the applicants. It therefore ought to follow that the Authority did not have jurisdiction to impose the penalty on the partnership because the partners had no local presence nor could the documents be served on them locally.

There is a minority decision which suggests that there is jurisdiction because of the modern availability of electronic service in place of personal service. That approach cuts across all kinds of national and international enforcement issues and cannot be correct. Electronic service in some form has been available for generations. The fact that it is now easier and “digital or online” cannot make a difference to international legal principles relating to extra-territorial jurisdiction.

(Viceroy Research Partnership LLC and Others against Financial Sector Conduct Authority Financial Services Tribunal, case numbers A45/A46/A47/A48/2021: Decision 15 November 2022).



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